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Educational Information

Authorized Official (AO): The authorized official must be an individual identified as the authorized official on the CMS 855-S enrollment application. This individual must be appointed by the supplier and be the supplier’s general partner, chairman of the board, chief financial officer, chief executive officer, president, direct owner of the supplier organization, or must hold a position of similar status and authority within the supplier’s organization. The authorized official has the legal authority granted by the supplier to submit a bid on behalf of the company and to enter into a contract with Medicare to furnish competitively bid items to Medicare beneficiaries. For registration purposes, there can only be one AO for an organization. The AO may approve or reject the request for backup authorized officials (BAO) and end users to access and enter data in DBidS.

Backup Authorized Official (BAO): One or more individuals listed on the CMS 855-S form who can serve as a backup to the authorized official (AO) in order to avoid disruption in the bidding process should the AO leave the organization or become unavailable during the bid window. For registration purposes, there can be one or more BAOs in an organization.

Balance Sheet: A financial statement that summarizes a company’s assets, liabilities, and owner’s equity at a specific point in time.

Bid: An offer to furnish an item for a particular price and time period that includes, as appropriate, any services that are directly related to the furnishing of the item. The bid should consider all costs associated with furnishing an item.

Bidder Number: System generated number that identifies each unique bidding entity.

Bid Price/Amount: The amount a bidder offers to furnish a competitively bid item to Medicare beneficiaries in a specific CBA, as part of the Competitive Bidding Program. The bid amount must be bona fide for each item (identified by the HCPCS code). It should be rational, feasible, and supportable, include the cost of furnishing the item throughout the CBA (except for SNFs and NFs that elect to participate as specialty suppliers) for the duration of the contract period, and include overhead and profit.

Bid Window: The period of time during which the bidder can submit bids for consideration in a competitive bidding round. No bids are accepted after the bid window closes.

Centers for Medicare & Medicaid Services (CMS) Approved Accreditation Organization: An organization that has been approved by CMS to accredit suppliers of DMEPOS items. A listing of approved accreditation organizations can be found by visiting: http://www.cms.gov/MedicareProviderSupEnroll/Downloads/DeemedAccreditationOrganizationsCMB.pdf.

Common Ownership or Common Control: (i) an ownership interest is the possession of equity in the capital, stock, or profits of another supplier; (ii) a controlling interest is when one or more of the owners of a supplier is an officer, director, or partner in another supplier; and (iii) two or more suppliers are commonly owned if one or more of them has an ownership interest totaling at least 5 percent in the other(s).

Competitive Bidding Area (CBA): An area established by the Secretary for the purposes of the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. The area is defined by ZIP codes and may be larger than or smaller than the related metropolitan statistical area (MSA).

The national mail-order CBA includes all parts of the United States, including the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa.

Competitive Bidding Implementation Contractor (CBIC): The CMS contractor that is responsible for conducting certain functions, including assisting CMS with performing bid evaluations, supporting CMS’ education efforts, and monitoring the Medicare DMEPOS Competitive Bidding Program.

Competitive Bidding Program: A program where CMS solicits bids from qualifying suppliers, establishes a single payment amount, and awards contracts within a designated CBA.

Contract Supplier: An entity awarded a contract by CMS to furnish items under a Competitive Bidding Program.

Entity: For competitive bidding purposes, the term “entity” refers to a unique bidder. For example, for a supplier that is commonly owned and/or commonly controlled and has multiple locations, all the locations furnishing competitively bid items within the designated CBA are considered one entity.

Fee Schedule: Medicare Part B payment amounts, as authorized by section 1834 of the Social Security Act, for DMEPOS items and services that are not included in the Competitive Bidding Program.

Healthcare Common Procedure Coding System (HCPCS): A standardized coding system used to process certain claims, including those for DMEPOS items and services, submitted to Medicare, Medicaid, and other health insurance programs by providers, physicians, and other suppliers.

Income Statement (Profit and Loss Statement or Statement of Operations): A financial report on the results of a business’ performance as reflected in the profitability of a business over a certain period. It itemizes the revenues and expenses of past performance that led to the current profit or loss.

Item: A product included in the Competitive Bidding Program that is identified by a HCPCS code, which may be specified for competitive bidding (for example, a product when it is furnished through mail-order), or a combination of codes and/or modifiers, and includes the services directly related to the furnishing of that product to the beneficiary. Items that may be included in a Competitive Bidding Program are:

(1) Durable medical equipment (DME) other than class III devices under the Federal Food, Drug and Cosmetic Act, as defined in 42 CFR §414.202 of this part and group 3 complex rehabilitative wheelchairs and further classified into the following categories:
     (i) Inexpensive or routinely purchased items, as specified in 42 CFR §414.220(a).
     (ii) Items requiring frequent and substantial servicing, as specified in 42 CFR §414.222(a).
     (iii) Oxygen and oxygen equipment, as specified in 42 CFR §414.226(c)(1).
     (iv) Other DME (capped rental items), as specified in 42 CFR §414.229.
(2) Supplies necessary for the effective use of DME other than inhalation drugs.
(3) Enteral nutrients, equipment, and supplies.
(4) Off-the-shelf orthotics, which are orthotics described in Section 1861(s)(9) of the Act that require minimal self-adjustment for appropriate use and do not require expertise in trimming, bending, molding, assembling or customizing to fit a beneficiary.

Letter of Intent: A signed letter that represents an agreement to enter into a subcontracting relationship, but is not the contract between the supplier and the subcontractor.

Mail-Order: Any item shipped or delivered to the beneficiary’s place of residence, regardless of the method of delivery. A non mail-order item is one that a beneficiary or caregiver purchases at a local pharmacy or supplier storefront rather than having the item delivered to the beneficiary’s residence. Diabetic testing supplies are the only items included in the current national mail-order competition.

Metropolitan Statistical Area (MSA): Area designated by the U.S. Office of Management and Budget (OMB) for the purposes of census data and other urban population calculations. An MSA can include major cities and the suburban areas surrounding them.

Multiple Locations: Two or more locations that are owned by one owner or by more than one owner (commonly owned or commonly controlled). Each location must be identified by its unique 10-digit PTAN.

Network: A group of between two to 20 small suppliers that form a legal entity to provide competitively bid items throughout an entire CBA. These suppliers must certify they cannot independently furnish all competitively bid items in the product category to beneficiaries throughout the entire geographic area of the CBA for which the network is submitting a bid. The network collectively submits a bid as a single entity.

Network Member: Any member of a network, including the primary network member.

Parent-Subsidiary: Parent-subsidiaries are separate entities where one entity has control of the other.

Primary Network Member: The network member that submits a bid on behalf of the network.

Product Category: A grouping of related items that are used to treat a similar medical condition.

Provider Enrollment, Chain and Ownership System (PECOS): The Internet-based application that can be used in lieu of the Medicare enrollment application (i.e., paper CMS 855) to enroll, view or change enrollment information, track the enrollment application process, add or change a reassignment of benefits, submit changes to existing enrollment information, reactivate an existing enrollment record, or withdraw from the Medicare Program.

Provider Transaction Access Number (PTAN): Previously referred to as the NSC supplier or billing number.

Request for Bids (RFB): A part of the formal process by which CMS is requesting eligible Medicare DMEPOS bidders to submit bids for the amount for which they would furnish items and services included in the Competitive Bidding Program, as well as certain documents (hardcopy and/or electronic) that demonstrate that the bidder meets applicable financial, quality, and accreditation requirements.

Single Location: A supplier with one location that is owned by one or more owners and is represented by a single PTAN.

Single Payment Amount: Allowed payment for an item furnished under a Competitive Bidding Program.

Small Supplier: A supplier that generates gross revenue of $3.5 million or less in annual receipts, including Medicare and non-Medicare revenue.

Specialty Supplier: A skilled nursing facility (SNF) or nursing facility (NF) that is awarded a competitive bidding contract to furnish competitively bid items only to its own residents to whom it would otherwise furnish Part B services.

Statement of Cash Flows: Includes cash flows resulting from operating, financing, and investing activities.

Subcontractor: An entity, an individual, or a group of individuals that contracts with a contract supplier to supply a service either to a contract supplier or directly to the beneficiary. Medicare payment is made to the contract supplier for the cost of the service. 

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last updated on 11/30/2011


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